navg-ex991

Stamford, CT – May 5, 2016 -- The Navigators Group, Inc. (NASDAQ:NAVG) reported net income of $22.9 million, or $1.54 per diluted share, for the three months ended March 31, 2016 compared to $25.9 million, or $1.77 per diluted share, for the comparable period in 2015. Operating earnings were $20.2 million, or $1.36 per diluted share, for the three months ended March 31, 2016 compared to $20.9 million, or $1.43 per diluted share, for the comparable period in 2015.

Gross written premiums and net written premiums for the three months ended March 31, 2016 were $413.9 million and $319.8 million, respectively, increases of 4.4% and 10.7% from the comparable period in 2015.

The combined ratio for the three months ended March 31, 2016 was 95.1% compared to 92.3% for the comparable period in 2015.

Stan Galanski, President and Chief Executive Officer commented, “We are pleased to report profitable underwriting results across all three of our reporting segments, contributing to strong operating earnings and book value growth for the quarter. Our marine business continued to perform very well globally as did our U.S. property and casualty products. Premium growth benefitted from the ongoing development of the previous investments made in new products and new offices over the past few years. This was most evident in our International Insurance segment, where our newer first-party products at Lloyd’s contributed meaningfully to growth as did our European regional offices. At the same time, we continue to walk away from business that does not meet our standards for rates and policy terms, emphasizing the integrity of individual risk underwriting. This led us to reduce our writings in the A&H treaty portfolio of GlobalRe. We are encouraged by the improved contribution to earnings from our investment portfolio, which was achieved while maintaining the overall credit quality of the portfolio.”

Stockholders’ equity was $1.144 billion, or $78.72 per share, as of March 31, 2016 compared to $1.096 billion, or $75.96 per share, as of December 31, 2015.

Net investment income for the three months ended March 31, 2016 was $19.6 million, an increase of 20.6% from the comparable period in 2015. The annualized pre-tax investment yield, excluding net realized gains and losses and other-than-temporary impairment losses recognized in earnings, was 2.7% for the three months ended March 31, 2016, compared to 2.4% for the comparable period in 2015.

The Company’s investment portfolio mainly consists of fixed income securities with an average quality rating of “AA-/Aa3” as defined by Standard & Poor’s and Moody’s, respectively, and an average effective duration of 3.7 years as of March 31, 2016. As of March 31, 2016, net unrealized gains within our investment portfolio were $72.9 million, an increase of $35.6 million compared to December 31, 2015.

There were $1.6 million of net realized gains recognized in earnings for the three months ended March 31, 2016, compared to $5.6 million for the same period in 2015.

Other income (loss) for the three months ended March 31, 2016 was $2.6 million of income, compared to $2.2 million of income for the same period in 2015. Other income (loss) primarily consists of realized and unrealized foreign exchange gains and losses.

The Company will hold a conference call on Friday, May 6, 2016 starting at 8:30 a.m. (EST) to discuss the 2016 first quarter results. The call will be available via live webcast on Navigators’ website (www.navg.com).

To participate by telephone, the domestic dial-in number is (800) 850-2903 and the international dial-in is (224) 357-2399. Participants may connect to the webcast at:

Net operating earnings, or net income excluding after-tax net realized gains (losses), after-tax net other-than-temporary impairment losses recognized in earnings, and after-tax foreign exchange gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity’s functional currency) and translation adjustments (translation of foreign currency denominated assets and liabilities into the entity’s functional currency), is a non-GAAP financial measure that is a common performance measurement for insurance companies. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business.

The Navigators Group, Inc. is an international specialty insurance holding company with insurance company operations, underwriting management companies and operations at Lloyd's. Navigators has offices in the United States, the United Kingdom and Continental Europe, as well as representative offices in China and Brazil.

This press release may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Whenever used in this release, the words “estimate,” “expect,” “believe” or similar expressions are intended to identify such forward-looking statements. Forward-looking statements are derived from information that we currently have and assumptions that we make. We cannot assure that results that we anticipate will be achieved, since results may differ materially because of known and unknown risks and uncertainties that we face. Please refer to Navigators’ most recent reports on Forms 10-K and 10-Q and its other filings with the Securities and Exchange Commission for a description of Navigators’ business and the important factors that may affect that business. Navigators’ undertakes no obligation to publicly update or revise any forward-looking statement.

	Three Months Ended
	March 31,
Results of Operations	2016			2015			Change
Gross written premiums	$	413,877		$	396,460			4.4	%
Net written premiums		319,820			288,958			10.7	%

Revenues:
Net earned premiums		264,358			236,132			12.0	%
Net investment income		19,594			16,253			20.6	%
Net realized gains (losses):
Total other-than-temporary impairment losses		(109	)		23		NM
Portion of loss recognized in other comprehensive
income (before tax)		109			(23	)	NM
Net other-than-temporary impairment losses
recognized in earnings		-			-		NM
Other realized gains (losses)		1,597			5,596			-71.5	%
Net realized gains (losses)		1,597			5,596			-71.5	%
Other income (loss)		2,549			2,242			13.7	%
Total revenues		288,098			260,223			10.7	%

Expenses:
Net losses and loss adjustment expenses		152,956			130,198			17.5	%
Commission expenses		37,554			32,905			14.1	%
Other operating expenses		60,809			54,909			10.7	%
Interest expense		3,858			3,855			0.1	%
Total expenses		255,177			221,867			15.0	%

Income before income taxes		32,921			38,356			-14.2	%

Income tax expense (benefit)		9,989			12,427			-19.6	%

Net income (loss)	$	22,932		$	25,929			-11.6	%


Per Share Data

Net income per common share:
Basic	$	1.58		$	1.81			-12.7	%
Diluted	$	1.54		$	1.77			-13.1	%

Average common shares outstanding:
Basic		14,492,214			14,327,606
Diluted		14,891,646			14,637,837

Underwriting Ratios
Loss Ratio		57.9	%		55.1	%
Expense Ratio		37.2	%		37.2	%
Combined Ratio		95.1	%		92.3	%


Balance Sheet Data	March 31,			Dec. 31,
	2016			2015
Stockholders' equity	$	1,143,879		$	1,096,148			4.4	%
Book value per share	$	78.72		$	75.96			3.6	%

	March 31,			December 31,
	2016			2015
ASSETS
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost: 2016: $2,432,837; 2015: $2,400,245)	$	2,477,720		$	2,414,210
Equity securities, available-for-sale, at fair value (cost: 2016: $286,811; 2015: $281,943)		314,815			305,271
Short-term investments, at fair value (amortized cost: 2016: $211,782; 2015: $217,743)		211,782			217,745
Total investments	$	3,004,317		$	2,937,226

Cash		72,618			69,901
Premiums receivable		348,916			276,616
Prepaid reinsurance premiums		220,696			232,588
Reinsurance recoverable on paid losses		55,752			49,506
Reinsurance recoverable on unpaid losses and loss adjustment expenses		793,632			809,518
Deferred policy acquisition costs		105,359			91,983
Accrued investment income		16,451			16,001
Goodwill and other intangible assets		6,746			6,807
Current income tax receivable, net		13,032			22,323
Deferred income tax, net		-			3,900
Other assets		59,114			67,643
Total assets	$	4,696,633		$	4,584,012

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for losses and loss adjustment expenses	$	2,211,848		$	2,202,644
Unearned premiums		864,247			820,676
Reinsurance balances payable		123,165			107,411
Senior notes		263,616			263,580
Deferred income tax, net		8,280			-
Accounts payable and other liabilities		81,598			93,553
Total liabilities	$	3,552,754		$	3,487,864

Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000 shares, none issued	$	-		$	-
Common stock, $.10 par value, authorized 50,000,000 shares, issued 18,042,474 shares for 2016
and 17,942,269 shares for 2015		1,803			1,793
Additional paid-in capital		359,829			357,829
Treasury stock, at cost (3,511,380 shares for 2016 and 2015)		(155,801	)		(155,801	)
Retained earnings		891,655			868,723
Accumulated other comprehensive income		46,393			23,604
Total stockholders' equity	$	1,143,879		$	1,096,148
Total liabilities and stockholders' equity	$	4,696,633		$	4,584,012

	Three Months Ended March 31, 2016
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Gross written premiums	$	210,647		$	144,143		$	59,087		$	-		$	413,877
Ceded written premiums		(54,497	)		(34,971	)		(4,589	)		-			(94,057	)
Net written premiums		156,150			109,172			54,498			-			319,820

Net earned premiums		148,340			78,008			38,010			-			264,358
Net losses and LAE		(91,512	)		(40,410	)		(21,034	)		-			(152,956	)
Commission expenses		(14,855	)		(15,355	)		(7,745	)		401			(37,554	)
Other operating expenses		(33,761	)		(21,771	)		(5,277	)		-			(60,809	)
Other underwriting income (expense)		361			-			49			(401	)		9

Underwriting profit (loss)	$	8,573		$	472		$	4,003		$	-		$	13,048

Net investment income											19,594			19,594
Net realized gains (losses)											1,597			1,597
Interest expense											(3,858	)		(3,858	)
Other income (loss)											2,540			2,540
Income before income taxes	$	8,573		$	472		$	4,003		$	19,873		$	32,921
Income tax (expense) benefit											(9,989	)		(9,989	)
Net income (loss)													$	22,932


Losses and LAE ratio		61.7	%		51.8	%		55.3	%					57.9	%
Commission expense ratio		10.0	%		19.7	%		20.4	%					14.2	%
Other operating expense ratio ⁽²⁾		22.5	%		27.9	%		13.8	%					23.0	%
Combined ratio		94.2	%		99.4	%		89.5	%					95.1	%

(2) - Includes Other operating expenses and Other underwriting income (expense).

	Three Months Ended March 31, 2015
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate ⁽¹⁾			Total
Gross written premiums	$	199,327		$	122,427		$	74,706		$	-		$	396,460
Ceded written premiums		(68,730	)		(34,256	)		(4,516	)		-			(107,502	)
Net written premiums		130,597			88,171			70,190			-			288,958

Net earned premiums		131,091			65,525			39,516			-			236,132
Net losses and LAE		(77,799	)		(29,691	)		(22,708	)		-			(130,198	)
Commission expenses		(14,345	)		(11,413	)		(7,298	)		151			(32,905	)
Other operating expenses		(33,688	)		(17,009	)		(4,212	)		-			(54,909	)
Other underwriting income (expense)		196			-			10			(151	)		55

Underwriting profit (loss)	$	5,455		$	7,412		$	5,308		$	-		$	18,175

Net investment income											16,253			16,253
Net realized gains (losses)											5,596			5,596
Interest expense											(3,855	)		(3,855	)
Other income (loss)											2,187			2,187
Income before income taxes	$	5,455		$	7,412		$	5,308		$	20,181		$	38,356
Income tax (expense) benefit											(12,427	)		(12,427	)
Net income (loss)													$	25,929


Losses and LAE ratio		59.3	%		45.3	%		57.5	%					55.1	%
Commission expense ratio		10.9	%		17.4	%		18.5	%					13.9	%
Other operating expense ratio ⁽²⁾		25.6	%		26.0	%		10.6	%					23.3	%
Combined ratio		95.8	%		88.7	%		86.6	%					92.3	%

(2) - Includes Other operating expenses and Other underwriting income (expense).

	U.S. Insurance
	Three months ended March 31, 2016												Three months ended March 31, 2015
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			% Change Total
Gross written premiums	$	43,163		$	141,278		$	26,206		$	210,647		$	40,835		$	134,146		$	24,346		$	199,327			5.7	%
Ceded written premiums		(17,647	)		(30,507	)		(6,343	)		(54,497	)		(16,286	)		(39,558	)		(12,886	)		(68,730	)		-20.7	%
Net written premiums		25,516			110,771			19,863			156,150			24,549			94,588			11,460			130,597			19.6	%

Net earned premiums	$	23,250		$	109,159		$	15,931		$	148,340		$	23,924		$	90,735		$	16,432		$	131,091			13.2	%
Net losses and LAE		(9,775	)		(71,597	)		(10,140	)		(91,512	)		(10,188	)		(58,047	)		(9,564	)		(77,799	)		17.6	%
Commission expenses		(1,482	)		(11,852	)		(1,521	)		(14,855	)		(4,032	)		(8,556	)		(1,757	)		(14,345	)		3.6	%
Other operating expenses		(7,372	)		(21,522	)		(4,867	)		(33,761	)		(6,973	)		(21,059	)		(5,656	)		(33,688	)		0.2	%
Other underwriting income (expense)		79			268			14			361			151			44			1			196			84.2	%

Underwriting profit (loss)	$	4,700		$	4,456		$	(583	)	$	8,573		$	2,882		$	3,117		$	(544	)	$	5,455			57.2	%

Losses and LAE ratio		42.0	%		65.6	%		63.7	%		61.7	%		42.6	%		64.0	%		58.2	%		59.3	%
Commission expense ratio		6.4	%		10.9	%		9.5	%		10.0	%		16.9	%		9.4	%		10.7	%		10.9	%
Other operating expense ratio ⁽¹⁾		31.4	%		19.4	%		30.5	%		22.5	%		28.5	%		23.2	%		34.4	%		25.6	%
Combined ratio		79.8	%		95.9	%		103.7	%		94.2	%		88.0	%		96.6	%		103.3	%		95.8	%

(1) - Includes Other operating expenses and Other underwriting income (expense).

	Int'l Insurance
	Three months ended March 31, 2016												Three months ended March 31, 2015
amounts in thousands	Marine			P&C			Professional Liability			Total			Marine			P&C			Professional Liability			Total			% Change Total
Gross written premiums	$	71,948		$	44,046		$	28,149		$	144,143		$	67,410		$	32,950		$	22,067		$	122,427			17.7	%
Ceded written premiums		(11,089	)		(17,229	)		(6,653	)		(34,971	)		(10,822	)		(16,129	)		(7,305	)		(34,256	)		2.1	%
Net written premiums		60,859			26,817			21,496			109,172			56,588			16,821			14,762			88,171			23.8	%

Net earned premiums	$	38,856		$	21,209		$	17,943		$	78,008		$	37,792		$	16,034		$	11,699		$	65,525			19.1	%
Net losses and LAE		(20,088	)		(11,216	)		(9,106	)		(40,410	)		(19,511	)		(4,880	)		(5,300	)		(29,691	)		36.1	%
Commission expenses		(9,405	)		(2,775	)		(3,175	)		(15,355	)		(9,190	)		(1,027	)		(1,196	)		(11,413	)		34.5	%
Other operating expenses		(8,442	)		(8,708	)		(4,621	)		(21,771	)		(6,695	)		(5,984	)		(4,330	)		(17,009	)		28.0	%
Other underwriting income (expense)		-			-			-			-			-			-			-			-		NM

Underwriting profit (loss)	$	921		$	(1,490	)	$	1,041		$	472		$	2,396		$	4,143		$	873		$	7,412			-93.6	%

Losses and LAE ratio		51.7	%		52.9	%		50.7	%		51.8	%		51.6	%		30.4	%		45.3	%		45.3	%
Commission expense ratio		24.2	%		13.1	%		17.7	%		19.7	%		24.3	%		6.4	%		10.2	%		17.4	%
Other operating expense ratio ⁽¹⁾		21.7	%		41.0	%		25.8	%		27.9	%		17.8	%		37.4	%		37.0	%		26.0	%
Combined ratio		97.6	%		107.0	%		94.2	%		99.4	%		93.7	%		74.2	%		92.5	%		88.7	%

(1) - Includes Other operating expenses and Other underwriting income (expense).

	For the Three Months Ended March 31,
	Amounts						Loss Ratio
Net Incurred Loss Activity	2016			2015			2016			2015
US Insurance:
Loss and LAE payments	$	73,035		$	62,734			49.2	%		47.8	%
Change in reserves		18,477			15,065			12.5	%		11.5	%
Net incurred loss and LAE		91,512			77,799			61.7	%		59.3	%

International Insurance:
Loss and LAE payments		29,243			35,537			37.5	%		54.2	%
Change in reserves		11,167			(5,846	)		14.3	%		-8.9	%
Net incurred loss and LAE		40,410			29,691			51.8	%		45.3	%

Global Reinsurance:
Loss and LAE payments		25,131			21,212			66.1	%		53.7	%
Change in reserves		(4,097	)		1,496			-10.8	%		3.8	%
Net incurred loss and LAE		21,034			22,708			55.3	%		57.5	%

Total
Loss and LAE payments		127,409			119,483			48.2	%		50.6	%
Change in reserves		25,547			10,715			9.7	%		4.5	%
Net incurred loss and LAE	$	152,956		$	130,198			57.9	%		55.1	%

	Amounts						Loss Ratio Impact
Impact of Prior Years Reserves	Mar. 31,			Mar. 31,			Mar. 31,			Mar. 31,
Favorable / (Unfavorable) Development	2016			2015			2016			2015
US Insurance	$	2,669		$	6,409			1.0	%		2.7	%
International Insurance		(855	)		6,191			-0.3	%		2.6	%
Global Reinsurance		20			(1	)		0.0	%		0.0	%
Total	$	1,834		$	12,599			0.7	%		5.3	%

	As of March 31, 2016
	Case		IBNR
Net Loss Reserves:	Reserves		Reserves		Total
US Insurance:
Marine	$	61,330	$	52,905	$	114,235
Property Casualty		181,868		539,950		721,818
Professional Liability		35,188		60,167		95,355
Total US Insurance		278,386		653,022		931,408
International Insurance:
Marine		168,371		60,951		229,322
Property Casualty		42,189		21,437		63,626
Professional Liability		27,136		62,123		89,259
Total International Insurance		237,696		144,511		382,207

Global Reinsurance		37,309		67,292		104,601

Total Net Loss Reserves	$	553,391	$	864,825	$	1,418,216

	As of December 31, 2015
	Case		IBNR
Net Loss Reserves:	Reserves		Reserves		Total
US Insurance:
Marine	$	68,677	$	55,408	$	124,085
Property Casualty		170,988		514,777		685,765
Professional Liability		42,546		60,528		103,074
Total US Insurance		282,211		630,713		912,924
International Insurance:
Marine		167,157		61,409		228,566
Property Casualty		40,313		19,735		60,048
Professional Liability		19,583		63,229		82,812
Total International Insurance		227,053		144,373		371,426

Global Reinsurance		32,160		76,616		108,776

Total Net Loss Reserves	$	541,424	$	851,702	$	1,393,126

As of March 31, 2016, the average quality of the investment portfolio as rated by S&P and Moody’s was AA-/Aa3 with an average duration of 3.7 years. The Company does not own any collateralized debt obligations (CDO’s) or asset backed commercial paper.

	As of March 31, 2016
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed maturities:
U.S. Treasury bonds, agency bonds and foreign government bonds	$	322,009	$	4,934	$	(4,478	)	$	321,553
States, municipalities and political subdivisions		550,855		26,085		(497	)		525,267
Mortgage-backed and asset-backed securities:
Agency mortgage-backed securities		380,418		8,831		(323	)		371,910
Residential mortgage obligations		29,451		569		(131	)		29,013
Asset-backed securities		235,714		421		(2,040	)		237,333
Commercial mortgage-backed securities		188,169		4,903		(1,718	)		184,984
Subtotal	$	833,752	$	14,724	$	(4,212	)	$	823,240
Corporate bonds		771,104		15,457		(7,130	)		762,777
Total fixed maturities	$	2,477,720	$	61,200	$	(16,317	)	$	2,432,837
Equity securities		314,815		29,650		(1,646	)		286,811
Short-term investments		211,782		-		-			211,782
Total investments	$	3,004,317	$	90,850	$	(17,963	)	$	2,931,430


Contact:	Ciro M. DeFalco
	Senior Vice President and Chief Financial Officer
	(203) 905-6343
	cdefalco@navg.com
	www.navg.com